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Diploma in Business
Unit Number and Title
Unit 1 Business Environment
An organization is organized by group of people with a particular purpose such as business or public serving. There are different types of action taken the managers in the organization such as planning, coordination, structure selection, organizing, arrangement, running, logistics and management. Toyota is a popular global automobile organization established by Kiichiro Toyoda in 1937 at Japan (toyota-global.com, 2016). In 19th century the organization has already expand their business in different country including UK(Scheer, 2012).
The organization has critically observed the change in business environment in global world. The demand of automobile has decreased the price of cars and fuel prices are gradually increased. Apart from the vehicle parts and equipment cost are getting higher than last year. However, the value for money and innovative production practice strategies of the organization help them to sustain in global competitive market. Therefore, the continuous improvement strategy of the organization helps them to get a reliable place in global automobile market(Sørensen, 2012). However, based on the recent competitive scenario in, the learner has planned to produce this report which will assist Toyota UK to understand different functions in different organization and organizational structure of other organization.
Business refers to the convertible process of skills and materials according to the request of customers or provides service as per the request of the customers. As stated by Anandarajanet al. (2012), business environment contains different factors such as customers, resources, competitors, suppliers, distributors, industry trends, substitutes, regulations, government activity, the economy, population and demography and innovation and technological development. It has been observed that resources such as human, physical and financial resources are most important components for any organization. Global organization like Toyota may seek to gain competitive advantage through price, quality and marketing strategy. It has been observed that business prospective of organization has been affected by the several factors such as technology change and government intervention. It has been observed that the customers are vital for organizational survival and prosperity. It has been noticed that the competitors of this type automobile industry are generally two types such as direct and indirect.
There are generally five types such as private organization, public, government organizations, co-operatives, charities and NGOs. As stated by Craig and Campbell(2012), private sector refers to the ownership and control of the organization is controlled by the private individuals or group. The aim of the organization is only profit. Sainsbury’s is considered as one of the top private global organization. There are different types of private organizations such as sole traders, partnership, limited company, cooperatives.
It has been observed that the economy of the public sector is directly controlled by government or government agencies. Therefore, the business operation is runs the different types of organization on behalf of its citizens and for their general well-being. National Health Service is one of the popular public organizations in England.
As stated by Tayuret al. (2012), the activities of the voluntary sector are involving in different organizations such as charity, voluntary bodies and business community. Those organizations are basically non-profit enterprises and non-governmental organization. It has been noticed that Cancer Research is popular voluntary organization in UK.
As opined by Werbach and Hunter (2012), the concept of business organization like Toyota UK covers different types of sectors such as people, objectives, management and resources. The business concept of Toyota depends on different factors such as profit, market share, technical excellence and corporate social responsibility. It has been observed that Toyota is typically sole traders’ organization. Therefore they can easily develop their business without any legal formalities. The owner or the centre head has total control on their business. It has been found that entire business operation of Toyota manages by headquarter in Japan. The management itself choose the working time and patterns of working for their organization. The human resource department able to establish close personal relationships with staffs and marketing team establishes close relationship with customers. The entire business operation of Toyota is based on interest and skills of the top management rather than employees.
On another hand the unlimited liability of the organization creates risk for owners. It has been found that Toyota has faced tough market competition by different farms like Volkswagen group in global market. It is too difficult for sole trade organization to increase additional capital. The higher officials have to spend long hours to make new business strategy. There is lack of continuity in the organization.
There are generally five types’ organizations like private organization, public, government organizations, co-operatives, charities and NGOs.
It has been noticed that limited companies are generally corporate association; they have legal identity in its own right. Therefore, the properties and other assets are owned by company but not their members. On another hand the assets of the members are not for organization use. Therefore, the liability of the individual is limited.
As stated by Sharma et al.(2012), limited companies have been formed by two or mere individuals. It has been found that business partner have to submit different documents such as memorandum of association and articles of association.
As argued by Zairi(2012), the private limited companies must have minimum one share holder but organization can offer large share to the public. However, the organization can offer large share to those people who want to sign business contract with this organization.It has been noticed that public limited companies have started as a public limited companies.
It has been noticed that Toyota starts their business as public limited company in 1937. There are three important share holder of Toyota such as TYO, LSE and NYSE(Sørensen, 2012). The organization has atleast one director in every branch of the organization. Currently the organization has $1.5tn shared capital in UK. It has been observed that Toyota UK offers their share for sale to the general public.
It has been observed that organization has maintained different rules and legislation to maintain their business profile as a public limited company. The organization has registered them with the London stock exchange to sell the share to general public. The London Stock Exchange strictly monitors share trading process. The organization has arranged annual general meeting with their shareholders once in a year (Kirchmer, 2012). It has been noticed that Toyota act trough their Company Directors. The shareholders of organization choose the individual who takes decision about important matters such as investment and marketing development.
There are three different types’ public limited companies such as small, medium and large. As stated by Holcombe and Ipate (2012), Small businesses have faced difficulties to sustain in the competition with large businesses. It has been found that small business worksin a very small market. On another hand there is small scope for the organization to changes their management strategy randomly.Generally, entry of competitors could damage their business significantly. However, the organization has less resource to protect themselves from new entries of the market. Therefore, large businesses can protect themselves from new competitors better through creating a high cost to enter the market.
According to Willard (2012), medium sized businesses have got better position than small size organization. they have served a larger market and can change their strategy once or twice a year. Even they can expand their business in new market with existing products. They have more resources to protect themselves from new entries to the market.However,the medium size organizations have faced risk due to the competition with very large organisation. The large organization has more resources the risks may be too high to sustain protection.
It has been noticed that organizations are classified based on the production such as primary, secondary and tertiary. Primary organization generally produced the raw materials from natural raw materials and sends it to the secondary organization. The secondary organizations convert the raw materials into products and transfer the products to the tertiary organization. Tertiary organizations are generally retailers who sales the product or providing the service to the customers.
The scope of the organizations is depending on their product types. The scope for coca cola organization is to produce and supply soft drinks such as carbonated drinks, concentrates, fruit juice, ready to drink coffee, tea, sports energy drinks and bottled water.It has been observed that OXFAM is a charity organization has a broad target that supports more resources to protect themselves from new entries to the market; however against a very large organisation with more resources the risks may be too high to sustain protection.
It has been observed that the organization has selected vision, mission, goals and objective to improve their business performance. Vision refers to that position where the organization wants to go. Mission refers to the purpose and role of the company. As stated by Chen et al.(2012, p.1665), the reason for selecting mission is to provide the scope of the organisation so that the organization can fulfil its Objectives. Objective refers to the specific and shorter target of the organization.
The business operation of the organization is depending up on the shareholders and stake holders. Stake holders are considered as individuals or group of people who are interested in the business. However, these people are generally affected by the business activities. It has been found that there are different features in business environment of global firm like Toyota such as dynamic, differs and uncontrollable. Therefore, the business environment of Toyota is changing gradually based on the trend of customers and society but it is unpredictable also. The business is expanded internationally by the supportive industries. The business is uncontrollable because the entire business operation is based on macro environment, forces and factors.
The function of organization is depending on different functions such as human resource, sales and marketing, research and development, production and operations, customer service, finance and accounts, administration and IT. Marketing is considered as bridge of relationship with the market in order to satisfy the customers (Onettiet al. 2012, p.339). The marketing process is beneficial for both customers and suppliers. The marketing hel0ps the organization like Toyota to deliver customer information for developing new products which will support t quality life of the customers. It has been observed that Toyota has created a competitive business environment through their competitive pricing strategy. The organization has developed product distribution system which allows the customers convenient access to product and service. The high demand of the Toyota cars allows the organization to grow and expand its operations and collect more profit from UK market. it has been noticed than communicating messages of the organization helps to improve social behaviour in [positive way. It has been observed that the organization sometimes provided awareness messages such as anti-smoke alarms as well as unsafe driving in drunken condition may increase responsibility of the organization on the society.
As stated by Bøllingtoft (2012, p.305), finance is quite related with the expenditure or usage of organizational resources for different operation. The financialfunction provides valuable reports on financial performance and position in relation to business plan. The organization has allocated the funds to various parts of the organization in line with budget and measuring the use of financial resources against performance budget. In order to manage the cash flows the organization has to ensure that there are sufficient funds to meet business requirements. The financial performance of the every department monitors by the internal auditors. The finance of the large company was involved in the investment of surplus funds. It has been observed that many organizations have created the treasury fund to look after the business of the organization. Therefore the organization gets best returns and reduces the risk from investment. The investment of resource is generally considered as risk by most finance department which includes internal projects of additional production lines, cost improvement project, buying new technology to help quality and efficiency(Sørensen, 2012). It has been noticed that financial report of Toyota ensures that the organization meet large requirements of UK.
As stated by Yuet al.(2012, p.36), accounting in an organization like Toyota will be tracking all daily transactions of the purchases, sales, utilization of business resources internally and externally to the organisation. The cash flow in Toyota ensures that the organization pays sufficient funds to maintain business liabilities when the organisations need to pay. It has been observed that the finance team is responsible for sourcing additional funding for expansion of the business.
Toyota has involved advance human resource management department to look after the employee by the organization. The arched of the human resource management department to manage the employees to achieve 100% efficiency and god performance. The human resource management department also concern about the legislation and policies. The role of the human resource management involves in different activities such as recruitment, administrations, job design, maintaining employment law, employee relation, managing compensation, training and development of employee skills. This vision statement reads, “Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people. Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile. We will meet our challenging goals by engaging the talent and passion of people, who believe there is always a better way.”
Figure 1: Functions Relate to Mission and Objectives
(Source: Scheer, 2012)
It has been observed that Toyota has implemented corporate objectives which are supported by a detailed Corporate Strategic Action-Plan. The Corporate Strategic Action-Plan involvesdifferent the functions of the Organisation.Any plan has beenprepared by the higher level managers who take ownership for their Objectives.Each Function then using this objective and its due date will prepare its own Functional Strategic Action-Plan with sub-task and sub-deliverables/objectives that will be formed with input from unit heads within the Function. It has been observed that the organization follows bureaucratic leadership strategy to manage their operation. According to the bureaucratic leadership style the higher level managers decide or develop the strategy. After that the employees and team leaders have to fulfil the goals or strategy in mentioned timeframe (Scheer, 2012).
According to the key concept of Toyota, the bottleneck factor limit the production in a specific time frame. The organization follows own implementing strategy such as bottle neck factor, cycle time concept, idol time strategy, specific process of production system, thought puttime, utilization of resources.
This part is based on the different types and purposes of organisations such as public, private and voluntary sectors and legal structures. After that the learner has discussed the size and scope of a range of different types of organisations. On other hand the learner has discussed the relationship between different organisational functions and how they link to organisational objectives and structure.
Macro environment refers to the condition of economy of any organization in a particular region. It has been observed that macro environment includes the trend of gross domestic product, spending, monetary, fiscal policy and inflection. It has been observed that the macro environment controls major external and uncontrollable factors which influence decision making process of the organization.
The positive and negative impact on the organization has been discussed by PESTLE analysis:
Toyota has faced different political boundaries regarding expansion and development of business. In Toyota’s case, the political external factors affect the business of the organization. The organization has faced issues and opportunity due to some reason such as:
The political stability of major markets has been considered as an opportunity for Toyota to grow with minimal political tension (Craig and Campbell, 2012). On other hand free trade agreementsin Japan and other countries helps Toyota to operatetheir business alongwith opportunities for improvingmarket penetration. Apart from that the governmental provisionregarding eco-friendly products creates an opportunity for the organization to improve their products. It has been observed that eco-friendly products also satisfy the customers who are environment conscious.
According to the Toyota’s case, the economic external factors which influence the macro-environment are as follows:
Toyota has developed the opportunity to improve the export business of the organization from Japan. Then value of the currency creates a disadvantage for the organization. However, the organization gets the opportunity to grow their business in the U.S market (Werbach and Hunter, 2012).The organization has already developed second largest market in Japan. Apart from that, the quickimprovement of developing economies creates the opportunity for Toyota to improve revenues in future.
According to the case study,the main social/sociocultural external factors in Toyotaare as follows:
Toyota has got the opportunity to provide more products which satisfy customers’ increasing interest regarding hybrid and electric vehicles. However, the company has tocritically observe the widening wealth gap (Anandarajanet al. 2012). This is a considered as a threat because it is declining by the middle class. However, the middle class is the main revenue source for Toyota.
In this Toyota’s case study, there are the different notable technological external factors for company:
Toyota has that opportunity to improve its e-commerce capabilities. On another hand it has been noticed that the organization developed the contract with third-party e-commerce service providers in order to sale some products, such as spare parts of automobile industry. It has been noticed that Toyota has developed a strategy to provide opportunity to their customers through their mobile apps (Holcombe and Ipate, 2012). Their mobile application service also increasestheir customer engagement and loyalty. In recent days the company considers the threat of cybercrime such as corporate cyber-espionage.
In this case study the major environmental factors are as follows:
It has been observed that the organization has got the opportunities to develop more environment friendly products such as electric cars and high mileage cars (Scheer, 2012). The organization has taken the advantage of environment protection law and attracts the customers.
There are several legal factors which creates mixed effect on Toyota’s environment such as:
It has been noticed that the organization has the opportunity to grow with reduced concerns for infringement of its intellectual property right. The organization has found that the government is also improving the intellectual property protection (Willard, 2012). The organization has delivered the high quality products for the customers to satisfy their extended requirements.
The strengths of Toyota indicate this organization offers enough capability to keep up a position where it is one of the best auto manufacturers of the whole world. The model of SWOT analysis makes an identification of the strategic factors which will be serving as a form of capability of Toyota (Anandarajanet al. 2012). Their primary strengths are as follows:
The primary weaknesses have been mentioned below:
The Strength of Toyota primarily based on the economic as well as technological trends. And such an element from the SWOT analysis identifies all the strategic factors which a firm can ably make use of in terms of improvement of their business (Willard, 2012). The significant opportunities are provided below:
Threats primarily based on the competitive background. For Toyota the primary threats have been mentioned below:
In this section the learner has described the PESTLE analysis to evaluate the external effect of the organization. Apart from that the organization has determined the internal strength and weakness and external strength and external weakness of the organization.
Scheer, A.W., 2012. Business process engineering: reference models for industrial enterprises. Springer Science & Business Media.
Anandarajan, M., Anandarajan, A. and Srinivasan, C.A. eds., 2012. Business intelligence techniques: a perspective from accounting and finance. Springer Science & Business Media.
Sørensen, H.E., 2012. Business Development: a market-oriented perspective. John Wiley & Sons Ltd.
Craig, T. and Campbell, D., 2012. Organisations and the business environment.Routledge.
Tayur, S., Ganeshan, R. and Magazine, M. eds., 2012. Quantitative models for supply chain management (Vol. 17). Springer Science & Business Media.
Werbach, K. and Hunter, D., 2012. For the win: How game thinking can revolutionize your business. Wharton Digital Press.
Sharma, P., Chrisman, J.J. and Chua, J.H. eds., 2012. A review and annotated bibliography of family business studies.Springer Science & Business Media.
Zairi, M., 2012. Measuring performance for business results.Springer Science & Business Media.